THe FINANCIAL — Lenders offering some of their cheapest mortgage deals last year helped make homeowners’ monthly mortgage payments in 2011 the most affordable for 10 years, according to new research released today from Barclays, according to Barclays Bank.
In an analysis of more than one million customers’ accounts it found that, on average, people paid out 15.4 per cent of their take home pay last year to cover their monthly mortgage payments, compared to 2008 when it reached its highest point at 20.5 per cent. The lowest point since records began 10 years ago was in September 2011 when the average mortgage payment fell to 15.2 per cent, or £488 a month.
These figures support opinion research commissioned by Barclays that found the majority of homeowners say they are more comfortable with their current payment levels compared to this time last year. The poll of UK homeowners found that 83 per cent have room for manoeuvre should their circumstances or interest rates change and 64 per cent find their mortgage affordable, compared to 52 per cent this time last year.
Fewer homeowners think interest rates will increase this year – just 40 per cent think interest rates will rise in 2012, compared to 74 per cent who were asked at the beginning of 2011 about the year ahead. A quarter of homeowners believe rates will start to rise in 2013.
The majority of homeowners do have a plan in place for when interest rates start to rise, with around a third stating they will cut spending elsewhere by reducing their lifestyle budget and holidays to cover any increases. Barclays is urging homeowners to ensure they keep their mortgage repayment levels under review and look at how they can cut costs – to help with other rising household costs and / or to use this money as a savings cushion for when interest rates do start to increase.